Capri Expects Michael Kors to Return to Growth in Fourth Quarter

Capri Holdings (NYSE:CPRI) shares are trading higher after the company reported better-than-expected second-quarter results and raised its fiscal 2027 guidance above analyst estimates.

Adjusted EPS came in at 42 cents, beating the 21-cent estimate, while revenue of $809 million topped expectations of $781.05 million. Both metrics also exceeded management’s expectations, as monthly sales trends improved during the quarter.

Capri is using AI-driven analytics to personalize customer experiences. It has renovated 50 stores toward a target of 300 and opened seven Jet Set Lounges globally. Management said renovated locations are seeing higher traffic and revenue.

Fiscal 2027 Outlook

Capri expects company-wide revenue to return to growth in the second half of fiscal 2027, supported by new products, increased marketing and an improved customer experience.

Citing stronger momentum at Michael Kors and Jimmy Choo, the company raised its full-year guidance. Capri now expects fiscal 2027 GAAP EPS of $2.20, up from its previous outlook of $2.15 and above the $2.04 analyst estimate. It also increased its revenue forecast to $3.42 billion from $3.40 billion, compared with the $3.40 billion consensus.

For the third quarter, Capri expects GAAP EPS of 95 cents, slightly above the 94-cent analyst estimate, while forecasting revenue of $1.005 billion, below the $1.021 billion consensus.

Michael Kors: Sales Recovery and Product Momentum

Michael Kors revenue declined 8.6% year over year (Y/Y), partly due to wholesale shipment shifts and inventory delays that resulted in an estimated $50 million revenue impact. However, monthly sales trends improved as fall merchandise arrived and new products gained traction.

The brand reduced markdown inventory by approximately 40% and promotional activity by 50% to improve sales quality. Although these measures weighed on revenue, they supported stronger full-price sell-through, higher average unit retail (AUR) and gross margin expansion. Management said most of the impact is now behind the business.

Own retail sales fell by a low-double-digit percentage, while wholesale revenue declined by a mid-single-digit percentage, partly due to shipment timing. Outlet trends improved sequentially from first quarter, and wholesale point-of-sale trends remained positive. Management expects full-price sales and outlet performance to improve in the second half.

Michael Kors revenue is expected to improve sequentially in the third quarter and return to growth in the fourth quarter, supported by new products, holiday collections, higher marketing spending and store renovations.

Longer term, management sees the brand reaching $4 billion in revenue, with operating margins in the low-20% range.

Jimmy Choo: Double-Digit Revenue Growth

Jimmy Choo revenue grew 11.5% Y/Y, exceeding expectations, as marketing and product initiatives attracted younger shoppers and encouraged repeat purchases.

Own retail sales increased by a mid-single-digit percentage, with the Americas up by a double-digit percentage and EMEA by a high-single-digit percentage. Asia declined by a mid-single-digit percentage.

Wholesale revenue posted strong double-digit growth, supported by earlier fall shipments, while North American department stores recorded double-digit point-of-sale growth.

The brand’s global customer database grew 7% Y/Y, while accessories revenue increased by a double-digit percentage. Bonbon and Cinch handbags led growth, with Bar and Curve gaining traction.

Footwear demand was strong for the Margot flat, Scarlet kitten heel, Asia, Sakura and Faiz styles.

Capri expects Jimmy Choo to return to profitability in fiscal 2027, supported by revenue growth, gross margin expansion and cost discipline.

Longer term, the company targets $800 million in revenue and operating margins in the low-double-digit range.

CPRI Stock Price Activity: Capri Holdings shares are trading higher by 16.91% at $18.77 at the time of publication on Friday, according to Benzinga Pro data.

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